STORES Magazine - July 2008 - (Page 60)

NUTS AND BOLTS / RFID toward source-level tagging in California. “In fact, we’re able to not even add a process to our current system to tag the items because the RFID chip will be inside the price tag,” Livingston says. Known for its “Made in Downtown LA” motto, American Apparel uses a vertically integrated business model, which the company says “minimizes the use of sub-contractors and offshore labor.” Knitting, dyeing, sewing, photography, marketing, distribution and design are done in the company’s facilities in Los Angeles. Livingston did not disclose the exact price American Apparel is paying for RFID tags. He says Avery Dennison has been a good partner, but adds, “I’m keeping my eyes open. … We would like to get below 10 cents, and I think we can.” That’s due, in part, to the fact that analysts are watching how American Apparel spends every penny these days. It is now a publicly traded company, having completed a merger with Endeavor Acquisition in December. During a quarterly investor call in May, Charney referenced RFID and told analysts that he would like to see “a large number” of stores with the RFID capabilities by the end of this year. “That’s a true way we’re going to really be able to keep an accuracy to the inventory and make sure we know what’s in the back stock, what’s on the floor, what’s in transit, etc.,” he said. “When people come to our stores, they often know what they want. … When they want to come in and buy another pair of black socks? We’ve got them. That’s the main thing. That’s where we have the biggest opportunity to improve store productivity and generate profits.” American Apparel’s merchandising philosophy – which limits displays to just one item of each style and color — makes RFID a good fit, says Livingston. That might make good use of space and trendy aesthetics, but it’s not without its issues. 60 STORES / JULY 2008 Imagine what happens if, on a busy day, one woman buys an XL fuchsiaand-lime cotton spandex jersey halter leotard just hours before a similar-sized woman with a penchant for green and purple walks into the store. With RFID, American Apparel has transitioned to “a continuous replenishment process that ensures on-shelf availability,” Adams says. task in just under five hours. “That’s something that we used to get six to 12 people to work on all day and into the night,” he says. “There’s an amazing time savings there.” Eventually, RFID may be incorporated into loss prevention in those American Apparel stores where that makes sense, Livingston says, but that is not a focus at this time. “Right now this is bare bones,” he says. “It’s really just a solution that allows us to manage inventory at the retail level. We will work on and investigate the many other ways this might be used.” Distribution channels have potential, he says, adding, “it might possibly move further back to track our own fabric [and other materials] used throughout the entire manufacturing process.” Switching to RFID does involve an adjustment in mindset, Livingston says, but American Apparel employees have embraced the RFID push. “They realize this is an important project American Apparel’s and they’re taking it very seriousmerchandising ly.” philosophy Adams says there are obvious makes RFID selling points of RFID where asa good fit. sociates are concerned. “Once In addition to bridging the gap bepeople get the chance [to use the techtween the sales floor and the stockroom, nology] and see what they’re able to do RFID also is helping with problems of with it, it becomes a shot in the arm,” he mistaken identity. “We have a lot of says. “The light bulb goes on and it bestyles that look similar,” Livingston comes something that makes their jobs says, which, when handled manually, easier to do.” can contribute to inventory accuracy Livingston says he understands why problems. RFID has been slower to take off than In the New York store’s pilot program, some industry observers had initially accuracy rose above 99 percent — a sigpredicted. “IT departments are usually nificant improvement, although exact very overloaded and overworked and pre-RFID figures were tough to pin it’s very difficult for them to pick up a down, Livingston says. “We just knew new project,” he says, but adds that pothat it was way off.” tential should win out over red tape. Retailers “are all looking for ROI,” he RFID’s wow factor says, “and it doesn’t take a rocket scienFor Livingston, the real wow factor is tist to figure out, ‘I can really cut down the inventory process. With RFID, that on the amount of time it takes to mannow involves two people using two age the inventory … and improve accuStORES hand-held readers, who can finish the racy.’” WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - July 2008

STORES Magazine - July 2008 Contents Executive Editor's Page President's Page Dearth of Retail Creativity What Shoppers Think Wow, Is That a Wawa? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Merchandising Strategy Concept2Watch Point of Sale Outsourcing Human Resources Top 100 Retailers Store Design RFID IT Operations Systems Managements LP Vantage Point Newsbeat Cover Story Emergency Response Systems Background Checks LOEB Retail Letter Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - July 2008

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